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  3. 2.2 merry motors specializes in the manufacture of

2.2 Merry Motors specializes in the manufacture of small capacity motors. The following information is...

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Accounting

2.2 Merry Motors specializes in the manufacture of small capacity motors. The following information is available for the forthcoming year:

R

Selling price per unit

2 400

Variable cost per unit

1 800

Total fixed costs

48 000

The expected sales volume is 200 units.

Required:

2.2.1 Calculate the number of units that must be sold in order to make a profit of R50 000 (answer rounded off to the nearest whole number). (5)

2.2.2 The manager of Merry Motors wants to increase sales by 25 units with the following proposal:

Would you approve of the managers proposal? Motivate your answer by showing the effect it would have on the profit of Merry Motors. (5)

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